CAIXA Econômica Federal (2022)

One of the main points was the review of its internal policies. The bank revised its Institutional Policy to establish and implement the Social, Environmental and Climate Responsibility Policy (PRSAC, in Portuguese). In addition, the Risk and Capital Management Policy was updated, adapting it to the new RSAC concepts, as well as standardizing the integration of these risks with the other risks incurred by the bank.

In addition, a Working Group was set up with the objective of defining and implementing actions necessary to comply with the regulator, regarding the reporting of information related to RSAC. The creation of the methodology and parameters for assessing and classifying the social, environmental and climate risks of customers, sectors and credit operations was the responsibility of the unit responsible for the management of RSAC.

The Vice Presidency of Risks is responsible for overseeing the management of Social, Environmental and Climate Risk at CAIXA. In 2022, due to internal reorganization, the RSAC mandate has been formally transitioned from the Credit Risk division (GERAC) to the Specialized Risk Management division (GEREP). In light of this, new activities were mapped, paving the way for a more structured approach to RSAC management, resulting in an increased workforce, with 21 employees distributed into two RSAC teams.

The following are GEREP’s mandates related to Social, Environmental and Climate risk:

▪ Risk reporting and monitoring: actuarial, strategy, contagion, reputation/image and social, environmental and climate risks;

▪ Models, principles, guidelines, methodologies and parameters for managing social, environmental and climate risks;

▪ Stress tests, from the perspective of social, environmental and climate risks;

▪ Capital assessment for social, environmental and climate risks.

This division develops models, guidelines and other socio-environmental requirements applicable to the entire bank, in addition to being responsible for the Equator Principles, to which CAIXA has been a member since 2009.

All the major RSAC processes were reviewed in 2022 to improve risk management, of which we highlight the review of the capital assessment model, the improvement of standards, those related to RSAC management, the implementation of RSAC second line of defense monitoring and the creation of transparency and reporting processes.

About data reporting and disclosure, it is worth highlighting the Social, Environmental and Climate Risks and Opportunities Report (GRSAC), which aims to ensure the disclosure, standardization and official qualification of internal and external reports on the disclosure of data and information on social, environmental and climate risks. In 2022, CAIXA acted to implement the necessary actions to comply with the regulator, having its data disclosed in 2023 in the following document: https://www.caixa.gov.br.

Aligned with the need to integrate the RSAC, relevant actions were incorporated into CAIXA, namely:

– Mapping of social, environmental and climate risk events in the Operational Risk Database;

– Update of the Capital Model contemplating a broad view of risk management at CAIXA and possible losses;

– Institutionalization of the use of monitoring and risk assessment solutions by the second line of defense;

– Implementation of a monitoring process for credit operations assessed by social, environmental and climate risk;

– Implementation of the monitoring process for exposure to social, environmental and climate risk associated with economic sectors linked to the CNAE – National Classification of Economic Activity;

– Implementation of rating weighting for RSAC analyses in raising the rating of operations, within the scope of credit risk.

Regarding the analysis of projects that fall under the Equator Principles, the bank follows the international standardization of the International Finance Corporation – IFC, a member of the World Bank Group, adopting the environmental criteria referenced by the IFC Performance Standards on Social and Environmental Sustainability and the World Bank Group’s Environment, Health, and Safety Guidelines. CAIXA requires, in the analyses of projects, a socio-environmental compliance assessment carried out by an independent socio-environmental consultancy, if high risk is identified (Category A) and, when necessary, in medium risk projects (Category B). This assessment addresses the legal requirements applicable to environmental management, health and safety management and occupational medicine, the conditions of environmental licenses and the implementation of the Basic Environmental Plan for compensation and mitigation of socio-environmental impacts, as well as other criteria established in the Equator Principles. For projects with high-magnitude socio-environmental impacts, socio-environmental monitoring reports are also required periodically, covering the implementation and operation of the project during the term of the financing. Currently, socio-environmental consultants work in the risk monitoring of projects under the scope of the Equator Principles, whose review of the analysis of critical compliance and monitoring is carried out in pairs for greater evaluation (which always works with peer review). After validated by the team, all technical levels go through two higher levels until they are finally approved. In addition, the team periodically reviews the internal rules that deal with the Equator Principles, always seeking to improve the management of socio-environmental and ensure that projects are properly evaluated and monitored by the bank. The businesses areas are responsible for framing the operations, forwarding them to the area of ​​social, environmental and climate risks, in addition to carrying out all the necessary negotiations for Due Diligence, hiring consultants and negotiations with the entrepreneur. It is also up to them to check the contractual obligations to comply with Principle 8. In addition, they are responsible for monitoring the contract throughout its term, as well as for dealing with socio-environmental monitoring.

Annually, the socio-environmental risk area reports to higher levels on the Equator Principles, both to the Bank’s Risk Superintendence to which it is linked, and to the General Secretariat responsible for institutional relations with external entities. It is also responsible for the annual report on the Equator Principles with the EP Secretariat and for the Bank’s Integrated Report or its Sustainability Report.

CAIXA has specific rules and guidelines for granting responsible credit, using environmental and social criteria for the approval of clients and projects, to ensure that they comply with CAIXA’s Institutional Policy. This concern also extends to the bank’s portfolio, with socio-environmental requirements in other areas, such as rural credit, sanitation, infrastructure and housing. The company has specific rules to regulate its Institutional Policy, which delimits the implementation of socio-environmental responsibility guidelines. Among them, it is worth mentioning the management of socio-environmental risk, the management of assets (own and third parties), in corporate operations and in the risk analysis of clients and projects, demonstrating the Bank’s commitment to the Equator Principles.

In 2022, no projects financed by CAIXA, classified under the Equator Principles, were contracted in terms of “Project Finance”, “Project-Related Corporate Loans” or “Project-Related Refinance and Project-Related Acquisition Finance”.

CAIXA provided “Project Finance Advisory Services” for two Public Lighting projects in the Public-Private Partnership modality through the FEP CAIXA program.

More information on CAIXA’s socio-environmental responsibility, on its management of social, environmental and climate risks and on projects classified under the Equator Principles in 2022 can be found in its Sustainability Report: https://www.caixa.gov.br/sustentabilidade